Thursday, 30 July 2015

Favourite charts out of the Continental Europe earnings frenzy: Air Liquide, Siemens, Renault, Nokia

A few charts of particular note out of Europe's Q2 earnings frenzy today.

I have long regarded Air Liquide as your 'if you need to own an industrial Continental European listed stock then this is the one' name.  Today's numbers did nothing to change my mind.  Solid.

If you were going to pick a level?  Below Euro110 to buy some (more).  Yes, not cheap at teens EV/ebit, 2%/change yield but quality.  

Of course a company like Siemens gets a lot more press but I just don't get the same amount of turnaround enthusiasm that I do from a global peer like General Electric (link here). I ranked today's statement as being a bit downbeat to be honest: 

By far the most interesting aspect was the differentiation in their eyes of the Americas with other parts of the world - a not dis-similar observation that we saw Caterpillar make a week or so ago (link here). 

I am short Siemens and happy to add to this position above Euro100 as it provides good cover for other positioning.  

Renault are one of the bigger losers in the markets today.  A difficult company to value given the cross-stakes in Nissan but what I found striking was that European orders when split between their eponymous Renault brand and their cheaper cousin Dacia is clearly showing some favour towards the latter - sign of the times in Europe...

Finally I like the networking theme as noted with my write-ups on Ericsson and their numbers recently (link here).  Nokia showed good margin progress and, of course, the real optionality remains with the merger with Alcatel Lucent (who also produced solid numbers today).  

At the time of the Alcatel deal announcement I did some analysis (not published on Financial Orbit) suggesting that cost cutting/synergies would open up the potential of a Euro7+ share price.  That remains my view and I remain long: 

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